Money raised from Piramal to be used to fund working capital, buy out clean energy firm’s foreign investors. With its immediate funding needs met, ACME Cleantech is reorganizing its entire solar energy portfolio under one roof, with an eye on a public listing in 2017-18.
Mumbai: Delhi-based renewable energy and telecom solutions company ACME Cleantech Solutions Pvt. Ltd has raised Rs500 crore from Ajay Piramal-controlled Piramal Enterprises Ltd. The investment in ACME was done by Piramal Enterprises’s Structured Finance Group, which provides structured mezzanine funding to companies in various sectors, especially in infrastructure.
“The funds are being used for funding the working capital requirements of the group,” said Nikhil Dhingra, group director for finance, ACME. Part of the funds will also go towards a buyout of ACME’S foreign partners, he added. In 2013, French firm EDF Energies Nouvelle and Luxembourg-based EREN Renewable Energy had each picked up a 25% stake in ACME.
ACME currently has a total portfolio of around 1.5 gigawatts (GW) of solar energy projects. Of this, around 600 megawatts (MW) is operational and 400MW is under various stages of construction. The firm has signed power purchase agreements for another 500MW. By the end of 2016-17, the company aims to have an operational portfolio of 1GW. ACME has solar power projects in Telangana, Andhra Pradesh, Punjab, Gujarat, Madhya Pradesh, Odisha, Bihar, Uttar Pradesh and Chhattisgarh. According to the ACME website, it plans to build a portfolio of 7.5GW by 2019.
With its immediate funding needs met, the firm is reorganizing its entire solar energy portfolio under one roof, with an eye on a public listing.
“We are bringing all our projects under ACME Solar Holdings. We are evaluating various options, including a public listing of the solar portfolio. We might look at an IPO (initial public offering) sometime in fiscal 2017-18. We are a growing company and hence an IPO will be better suited for us than other routes such as an infrastructure investment trust,” he explained.
Piramal’s structured finance unit has been actively scouting for investments in the renewable energy space.
In March, Mint reported that Piramal Enterprises and Dutch pension fund asset manager APG Asset Management were jointly investing $132 million (Rs900 crore) in Essel Infrastructure Ltd’s solar platform. Last month, Mint reported that renewable energy producer Mytrah Energy India Pvt. Ltd is close to raising around Rs800 crore (about $120 million) from Piramal .
Investor interest in the Indian renewable energy sector is high, driven by the Narendra Modi government’s aggressive push for renewable power to fight climate change, with a target of increasing India’s clean energy capacity more than fivefold by 2022 to 175GW, of which 100GW is to come from solar power.
“The fund-raising environment for renewable energy platforms in India continues to improve. The business case for investment is fundamentally strong from a macro perspective and the potential for investors to deploy significant amounts of capital in the sector is substantial,” said Rahul Goswami, managing director at Greenstone Energy Advisors Pvt. Ltd, a boutique advisory firm.
However, not everyone believes that the ambitious targets set by the government can be achieved.
In a July 2015 report, Deutsche Bank forecast India’s solar capacity reaching only 34GW by 2020. “Realistically, challenges of weak financials of distribution companies and grid constraints need to be addressed. Hence, our forecasts consider 34GW solar power capacities in India by 2020,” the report said.
The intent is in place, but a comprehensive strategy is still needed to avoid an IPP-type (independent power producers) failure, wherein others in the value chain (coal, railways and distribution companies) were not geared up, Deutsche Bank said.
Source : Mint